The combination of sharp cost increases in South Africa, the world’s source for 55% of platinum-group metals, and increased demand from stricter off-road vehicle emissions standards in Japan and the US meant that there would be a “monumental”
“I wouldn’t discount $3 000/oz for platinum, but $2 000/oz to $2 500/oz is very easy for the price to go to within the next year,” McAllister said.
Workers in South Africa’s platinum mines were demanding double-digit wage hikes and had yet to reach an agreement with their employers.
Steep increases in electricity prices and the strong local currency were also hurting producer's costs.
“These are monumental changes, game changers,” McAllister commented.
According to him, off-road vehicles in the US and Japan must this year have catalytic convertors in them, and platinum is a key ingredient in auto catalysts for diesel engines.
“That’s going to demand anywhere between one-million and 1.5-million additional ounces of platinum,” he said, pointing out that world primary platinum production is only about six-million ounces a year, with about one-million to 1.5-million ounces being recycled yearly.
And with the platinum price climbing, McAllister believes the price for its sister metal, palladium, might surge even faster, with the difference in price between platinum and palladium reaching 60% or 70%, from the current 46%.